MVS Filewrapper® Blog: Federal Circuit affirms importance of secondary indicia of non-obviousness

The Federal Circuit has recently decided the case of Power Integrations, Inc. v. Fairchild Semiconductor International, Inc.  Power Integrations, Inc. (Power) sued Fairchild Semiconductor International, Inc.  (Fairchild) in the U.S. District Court for the District of Delaware, alleging infringement of Power’s four patents covering chargers for mobile phones.   In a bifurcated trial, the claims of the patents were found valid, and Fairchild was found to have willfully infringed and assessed $33 million in damages, which was subsequently remitted to $12 million.  Fairchild appealed to the Federal Circuit, arguing that the district court’s claim construction of two terms—“frequency variation signal” and “soft start circuit”—was erroneous, and that the district court’s denial of its JMOL of non-obviousness was in error.  Power cross-appealed the district court’s determination that the jury’s original damages award of was contrary to law, seeking the original $33 million in damages. 

           

Claim Construction

Fairchild argued on appeal that the district court’s construction of the “frequency variation signal” language improperly imported limitations from the preferred embodiments provided in the patent specification.  Fairchild sought a much broader construction, based on what it argued was the plain and ordinary meaning, thereby eliminating any need to turn to the disclosures of the patent.  The Federal Circuit concluded that the testimony of Power’s expert that there was no plain and ordinary meaning and in the absence of contrary evidence from Fairchild, the expert opinion was dispositive.  The court then confirmed the district court’s reading of the specification, ultimately concluding the construction of “frequency variation signal” was proper.

           

Fairchild also argued that the district court’s construction of “soft start circuit” as a means-plus-function limitation was erroneous because the claim did not use the term “means” and provided sufficient structure to preclude application of 35 U.S.C. § 112, paragraph 6.  The court concluded that the recitation of a “circuit” in conjunction with a sufficiently definite structure for performing the identified function was adequate to bar means-plus-function claiming. 

           

Obviousness

With respect to obviousness, Fairchild argued that the Power patents were obvious in light of the prior art, because the only difference compared to the patents-in-suit was that the prior art included erasable programmable read only memory (EPROM) absent from the patents and it would have been obvious to a person of skill in the art to simply remove the EPROM.  The court found that a person of skill in the art would understand that the EPROM in the prior art was used to achieve a different result than, and was thus unnecessary for, the “frequency-jittering” achieved by the claimed invention of the patent-in-suit.   However, the court also found that there was substantial evidence of “objective considerations of non-obviousness”—that is, secondary indicia—to support the jury’s verdict that Power’s patent would not have been obvious to the ordinarily skilled artisan.  Specifically, the court focused on:

(1) testimony that the EPROM in the prior art added expense and imposed design constraints as “a good indication that removing the EPROM provided otherwise unexpected benefits”;

(2) testimony that “each and every one of [the prior art] references . . . included [EP]ROMs,”

(3) more than 11 years having passed between issuance of the obviousness reference and the filing of the patent-in-suit without anyone disclosing removing the EPROMs;

(4) testimony that no one in the industry was able to come up with the patented invention;

(5) evidence of commercial success; and significantly (6) Fairchild competed with Power by reverse engineering and copying of Power Integrations’ products.  

The court concluded that this evidence was sufficient to support the verdict of non-obviousness.

           

Damages

The court also considered the “underlying question [of] whether Power Integrations is entitled to compensatory damages for injury caused by infringing activity that occurred outside the territory of the United States.”  The court answered that question with an emphatic “No.” 

Finally, the court considered whether the district court improperly precluded Power from introducing evidence of price erosion that occurred prior to notifying Fairchild of its infringing activity.  The court held that the district court’s decision to exclude the evidence was incorrect because “a price erosion analysis relating to damages arising from post-notice infringement must measure price changes against infringement-free market conditions, and thus the proper starting point of such a price erosion analysis is the date of first infringement.”

The court remanded the case for the district court to construe those claims and determine what effects the new constructions have on validity and infringement, and for a new trial on damages resulting from Fairchild’s direct infringement.

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